The balance sheet of Basket Rug Company reported the following:

Requirements
1. Compute the book value per share for the common stock, assuming all preferred dividends are fully paid up (none in arrears).
2. Compute the book value per share of the common stock, assuming that three years€™ cumulative preferred dividends, including the current year, are in arrears.
3. Basket Rug€™s common stock recently traded at a market price of $12.85 per share. Does this mean that Basket Rug€™s stock is a good buy at$12.85?

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Redeemable preferred stock, 5%, S70 par value, Common stockholders' equity: Total stockholders' equity redemption value $35,000; outstanding 400 shares28,000 80,000 $108,000 5,000 shares issued and outstanding